1. (Failing to plan for) medium term expenses. -> what is coming up in my life, and am i prepared for these expenses? Ex: gifts, study books 2. Making big financial decision without a ‘what-if’ analysis. -> figure out what the financial consequence is of any major decision Ex: new car, different job 3. Not having an emergency fund. -> even when you have to pay debts, make sure you have an emergency fund. Goal 1. 500$ Goal 2. Figure out your minimum monthly expense, and use that. Goal 3. Add goal 1 and 2 together. 4. Carrying a credit card balance. -> don’t use your credit card for credit. Pay it off monthly. 5. Refusing to build credit. -> don’t fear debt so much that you refrain from building up credit. 6. Failing to invest. -> don’t get something with high fees. Do invest to get that compound interest. 6.1 choosing debt payment or investing Find out if debt is something you are emotionally averse to. If yes; pay it off as soon as you can. If not, find out what your debt payments vs interest rates on investments are. Pay off debt with >5% interest. Pay the minimum on don’t let money (or a lack of it) hold you back from personal growth.
I was just going through your older videos from when you started several years ago, and I was so inspired by the amount of improvement over the last few years. While your older videos are still high quality, the videos you produce now are entertaining, informative, your set is amazingly designed, the audio and video quality are top notch, and you exude a confidence and charisma that only comes from professionals. Keep doing what you're doing. You've made such a huge impact already on so many people's lives.
Our education system has failed to to provide us any practical knowledge. Maybe a lesson on taxes or the importance of investing in retirement accounts.
1. (Failing to plan for) medium term expenses. -> what is coming up in my life, and am i prepared for these expenses? Ex: gifts, study books 2. Making big financial decision without a ‘what-if’ analysis. -> figure out what the financial consequence is of any major decision Ex: new car, different job 3. Not having an emergency fund. -> even when you have to pay debts, make sure you have an emergency fund. Goal 1. 500$ Goal 2. Figure out your minimum monthly expense, and use that. Goal 3. Add goal 1 and 2 together. 4. Carrying a credit card balance. -> don’t use your credit card for credit. Pay it off monthly. 5. Refusing to build credit. -> don’t fear debt so much that you refrain from building up credit. 6. Failing to invest. -> don’t get something with high fees. Do invest to get that compound interest. 6.1 choosing debt payment or investing Find out if debt is something you are emotionally averse to. If yes; pay it off as soon as you can. If not, find out what your debt payments vs interest rates on investments are. Pay off debt with >5% interest. Pay the minimum on don’t let money (or a lack of it) hold you back from personal growth.
I don't know if they are popular in the States, or if they even exists, but debit cards are a good choice as an alternative to credit cards. They only allow you to use the money that you already have so they force you to plan your expenses ahead. There are excellent for people who often find themselves having trouble with credit cards debts.
I'M one of those people who are very emotional about credit. I wouldn't sleep at night knowing I owe someone money. I'd rather be broke and sane than be debted and mad. At the moment, I can't wait to pay off the last fringes of my credits so i can finally breathe peacefully
Drug myself through some really rough years, and finally came out the other side. Now, I'm above American median, investing, taking charge of my finances, becoming physically fit again, and recommitting to learning Korean. As I became more motivated I began to recall your videos that I had seen when I was in the middle of my slump, and had to come back to kickstart some of my own more labored efforts. I know you're busy, and probably won't see this, but thanks dude.
Kinda disagree with the 'debt isn't evil' part but then watching this, I realize money and finances are different in America. If you have enough cash, or can prove you have a consistent source of income, you can rent easily and credit rating isn't really a thing where I'm from. The American society is very weird in terms of money tbh, not only does it force everyone to live alone after a certain age and look down on anyone getting support from family but it also forces some lifestyle and expenditure conditions on you.
It's a long read, but I'd recommend the book "Debt: The First 5,000 Years" if you're interested about debt. That's the book that really changed my outlook on the concept of debt itself. I will 100% agree that some of the practices around debt - such as predatory lending, and the general system that allows and even encourages people to get into a LOT of debt - are at best greedy and at worst evil. But debt itself is a great thing. Debt enables resources that aren't currently being used to be moved into the hands of people who could do productive things with them. If everyone tried to avoid debt as much as possible, I think complex society would be impossible. Everyone would eventually find themselves in need of something, and wouldn't have something of equal value to trade. Even the concept of money itself requires debt in order to work. Currency is essentially just an IOU; a dollar bill is basically just a note that says "I've done $1 worth of work; I'm now entitled to $1 worth of goods or services from someone else."
I always pay my bill of my credit card before of the end of the month, and i only use when I already have the money in my bank account. I buy and I pay instantly.
Hi Thomas, I'm a 2nd-year college student majoring in finance and management but I'm not completely confident in it. But if its anything like this video I'll be extremely happy. Thank you for this! And if I'm wrong, feel free to correct me (anyone)
Hi I would like to ask for tip on any good app where I can handle (I mean write down, plan and track) medium term expenses. Exactly as Thomas mention in video I have o lot of expenses which occur once a year or half-year etc. I am looking for application where I can input this expenses with information till which date, how much $, if it is reccuring and it will show me that every month I have to put aside this amount of $. Right now I have my own excel spreadsheet but it is not as comfortable and automated as it could be in some app. Thaks in advance for any tips.
Great video. I think the last one is especially important to think about. I actually recently bought a pretty nice "gravel/adventure" bike (fuji jari 1.5 absolutely love it) but I wouldn't let myself buy it until I was consistently biking 100+ miles a week on my old one (commuting to summer class helped that number out a lot). The experience helped me solidify what equipment/parts I really wanted and made it a pretty safe bet that I'd use it a lot. I'm trying out a similar thing with a new guitar and as much as it hurts to not get the shiny new PRS I really want, it makes more sense to have it when my playing ability matches (or surpasses) the quality of the equipment
Mi inglés es intermedio y eres la única persona que puedo escuchar y entender completamente. Además que me ayuda a mi pronunciación. Gracias!. My English is intermediate and you are the only person that I can fully listen and understand. Also, it helps me with my pronunciation. Thanks!.
Checkout Dave Ramsey. He recommends $1,000 emergency fund then pay off debt and go back and build up to a 3-6 month expense emergency fund after debt is paid off.
1. Plan for medium term expenses e.g. gifts for the holidays 2. What If Analysis, take data from current finances and ask what if e.g what if I went from full to part time 3. Have an emergency fund, to start target $500, then minimum monthly expenses
Great video with some very solid tips! I use YNAB for my budget and love it, BTW. I wish one more thing was mentioned about debt vs. investing; there is an unspoken assumption that you’ll always have the funds to make debt payments. In reality, if something happens to your income (or expenses) you may not be able to pay and then late fees and possibly increased interest rates pile on, most likely eliminating that gap between debt and investing. On the other hand, not having the funds to invest for a time does no excess harm. Just something to keep in mind about debt in the real world 🙂. To be in debt to someone puts them in control, which typically isn’t a good place to be. Note that I have my fair share of debt and am working towards getting it all paid off (other than the mortgage).
Good point - this is something that I couldn't fit into my outline, but it probably merits a whole video. Ideally the emergency fund, spending cushion, and investment base (given an initial strategy of using fairly conservative investments) would allow someone to weather an income gap when they still have debt. But there can easily be a situation where those things aren't enough. I need to do a video about debt/income ratios, types of debt, etc. Thanks!
My gym had a special $10/month deal for residents of the weird small town-within-a-town I lived in, while the regular rate was $50. But I'm pretty sure 24/7 Fitness and Planet Fitness are each around $10/month normally, and there are also local, city-owned rec centers to look into!
Hello +Thomas Frank! I can't recommend highly enough the slim little book _The Richest Man in Babylon._ Very timeless, in the guise of ancient parables from Babylon. :-)
+Anthony Ikani, agreed. The lessons are so relevant for today, even though they never use the terms "mortgage," "compound interest," or "mutual funds" they talk about them just the same. My favorite Amazon review of this book was from a guy who was selling radio advertising in his town, and as he made his rounds, he'd call upon a certain business owner every year. The guy had a car dealership, owned 3 of the nicest restaurants in town, and drove an expensive car. Yet he was about the same age as our radio salesman, so one day he asked him how he made his money. He expected to hear something like "inheritance" or "stock market" but instead he said "Once a year I re-read _The Richest Man in Babylon_ and the rest of the year I put into practice all the lessons it contains." Boom! :-)
I just decided to make a budget and organize my financial life and here's my favorite RU-vidr just uploaded a video that answered all my questions and added some extra helpful tips, GOD'S PLAN. TAHNK YOU TOMAS ❤️.
oh hey this was uploaded today, I'm a totally random guy clicked on your video because I was interested in the content, but then I also realized you're the dude who did that crash course thing on how to study. I'mma check this stuff out. Edit: solid advice, thanks Thomas. I think I'm gonna sit down and ask my bank about credit cards and not do debit anymore.
I was about to go to sleep (it's 2am here) and I see this. Obviously, I immediately started watching it and at the mention of the Excel sheet I remembered I did not put my transactions on YNAB today. This video helped me even before it began. :D
I always tell myself I’m going to learn and do what he says, but then I find myself staring at the damn handsome face of his and realize I wasn’t listening....
As always, very useful and very informative video. I live in France and some of the things you described here are different (the use of credit cards) but I found your budgeting/what-if spreadsheet very useful and you gave me motivation to make my own (it was done in a few minutes!). Thanks for the tips and keep on making great videos!
Искренне желаю тебе успеха, крепкого здоровья, достатка в доме, мира и гармонии в семье. Уверенно иди к своей мечте и никогда в себе не сомневайся. Знаю точно, что у тебя все получится. Ведь такого трудолюбивого, честного и усердного человека в наше время сложно найти.
Literally Dave Ramsey's book is all you need. He gives you specifics that Thomas is talking about, especially about and Emergency Fund and how to have a budget. It's really cheap and is a very useful tool. Highly recommend
Hey man, any existing or future video on how to achieve highest progress rate?? provided the subject (being me) is willing to put max. effort :P (As I currently am but my rank isn't decreasing fast enough)
Instead of thinking about emergency fund in terms of value, we should think it in terms of duration. Something like emergency fund equals 3 or 6 month expenses. And this should be spiked by a little percentage around 5 every year to take care of inflation.
So what he named are all USA based investing websites. Are there any investing websites for Europe as well? Particularly one that would include Latvia.
Its immoral to use a credit card instead of a debit card. Your credit card company charges the vendor a fee, every time you use it. So you are helping the credit card steal.
Its immoral to use a credit card instead of a debit card. Your credit card company charges the vendor a fee, every time you use it. So you are helping the credit card steal.
I like your ideas, but not the credit card one so much, I think many people sleep walk in to being a month in arrears on their everyday purchases. I would think differently if people held the forth coming month cash in there current account then used the credit card, but I am quite certain most people don't leaving them selves exposed or as Warren Buffett would say you can see who is skinny dipping when the tide goes out. I hope that makes sense. Or to put it another way, if you need your wage to pay the credit card at the end of the month, you are a month in arrears...
Hi. I enjoy your videos. I finally finished paying off my school loans. I did not do loan forgiveness. It was important to me to just keep paying them eve
I found your video as part of an assignment for my college class which is basically an intro freshman class. im glad i discovered you tho! subscribing today
that thing with the credit score is a curious cultural difference that isn't found like that in other places in the world. Where I live you actually have to prove that you don't have debt to get the appartment. Many people I know never even got a credit card because it is rarely used at all. If they are used it is looked at as an impossibility not to balance it in full immediately. Americans seem to have a way greater tolerance for dept than other cultures.
Great video, as always. I have a question. Perhaps it’s different in the US, but I live in the UK and run my own business, and I’m looking into setting up my own pension scheme. You never seem to mention pensions, so I was just wondering if you had any advice here? For instance, I will probably end up putting what I would have put in an investment account into a pension account instead ... Good idea?
I don't know exactly how pensions work over there, but here in the U.S. you have several options for creating your own retirement accounts. Since I'm a business owner, I use what's called a SIMPLE IRA. As an employee of my company, I contribute a certain amount of pre-tax money into it each year, and the "company" (which is just me at this point), matches my contribution up to 3% of my salary. You can also use a SEP IRA, which is slightly different, or even decide to just to a self-directed 401k. And of course there are the Traditional and Roth IRA options that everyone has access to. The strength of the three I mentioned before those, though, it that their contribution limits are much higher.
Sure! And here's the link: www.listenmoneymatters.com/show/ - note that I stepped down as co-host two weeks ago, so the latest episodes will have my friend Matt in my place. But the previous 245 are co-hosted by me.
